Question 1

Since the end of World War II, the U.S. has almost always had rising prices and an upward trend in real GDP. To explain this

Accepted Answer

A)  it is only necessary that long-run aggregate supply shifts right over time. 
B)  it is only necessary that aggregate demand shifts right over time. 
C)  both aggregate demand and long-run aggregate supply must be shifting right and aggregate demand must be shifting farther. 
D)  None of the above cases would produce rising prices and growing real GDP over time. 
A)  it is only necessary that long-run aggregate supply shifts right over time. 
B)  it is only necessary that aggregate demand shifts right over time. 
C)  both aggregate demand and long-run aggregate supply must be shifting right and aggregate demand must be shifting farther. 
D)  None of the above cases would produce rising prices and growing real GDP over time.

Question 2

Figure 33-7.  
-Refer to Figure 33-7. Suppose the economy starts at Y. If aggregate demand increases from AD2 to AD3, then the economy moves to

Accepted Answer

A)  V. 
B)  W. 
C)  X. 
D)  Z. 
A)  V. 
B)  W. 
C)  X. 
D)  Z.

Question 3

All explanations for the upward slope of the short-run aggregate supply curve suppose that the quantity of output supplied increases when the actual price level exceeds the expected price level.

Accepted Answer

A) True 
 B)False

Question 4

Other things the same, which of the following is correct?

Accepted Answer

A)  A decrease in the price level causes the dollar to appreciate. Aggregate demand shifts right. 
B)  A decrease in the price level causes the dollar to depreciate. Aggregate demand shifts right. 
C)  If speculators lose confidence in the American economy, the dollar appreciates. Aggregate demand shifts right. 
D)  If speculators lose confidence in the American economy, the dollar depreciates. Aggregate demand shifts right. 
A)  A decrease in the price level causes the dollar to appreciate. Aggregate demand shifts right. 
B)  A decrease in the price level causes the dollar to depreciate. Aggregate demand shifts right. 
C)  If speculators lose confidence in the American economy, the dollar appreciates. Aggregate demand shifts right. 
D)  If speculators lose confidence in the American economy, the dollar depreciates. Aggregate demand shifts right.

Question 5

An increase in household saving causes consumption to

Accepted Answer

A)  rise and aggregate demand to increase. 
B)  rise and aggregate demand to decrease. 
C)  fall and aggregate demand to increase. 
D)  fall and aggregate demand to decrease. 
A)  rise and aggregate demand to increase. 
B)  rise and aggregate demand to decrease. 
C)  fall and aggregate demand to increase. 
D)  fall and aggregate demand to decrease.

Question 6

The sticky-price theory of the short-run aggregate supply curve says that when the price level is higher than expected, some firms will have

Accepted Answer

A)  higher than desired prices, which leads to an increase in the aggregate quantity of goods and services supplied. 
B)  higher than desired prices, which leads to a decrease in the aggregate quantity of goods and service supplied. 
C)  lower than desired prices, which leads to an increase in the aggregate quantity of goods and services supplied. 
D)  lower than desired prices, which leads to a decrease in the aggregate quantity of goods and services supplied 
A)  higher than desired prices, which leads to an increase in the aggregate quantity of goods and services supplied. 
B)  higher than desired prices, which leads to a decrease in the aggregate quantity of goods and service supplied. 
C)  lower than desired prices, which leads to an increase in the aggregate quantity of goods and services supplied. 
D)  lower than desired prices, which leads to a decrease in the aggregate quantity of goods and services supplied

Question 7

An economic expansion caused by a shift in aggregate demand remedies itself over time as the expected price level

Accepted Answer

A)  falls, shifting aggregate demand right. 
B)  rises, shifting aggregate demand left. 
C)  falls, shifting aggregate supply right. 
D)  rises, shifting aggregate supply left. 
A)  falls, shifting aggregate demand right. 
B)  rises, shifting aggregate demand left. 
C)  falls, shifting aggregate supply right. 
D)  rises, shifting aggregate supply left.

Question 8

Other things the same, the aggregate quantity of output supplied will increase if the price level

Accepted Answer

A)  is lower than expected so that firms believe the relative price of their output has increased. 
B)  is lower than expected so that firms believe the relative price of their output has decreased. 
C)  is higher than expected so that firms believe the relative price of their output has increased. 
D)  is higher than expected so that firms believe the relative price of their output has decreased. 
A)  is lower than expected so that firms believe the relative price of their output has increased. 
B)  is lower than expected so that firms believe the relative price of their output has decreased. 
C)  is higher than expected so that firms believe the relative price of their output has increased. 
D)  is higher than expected so that firms believe the relative price of their output has decreased.

Question 9

Refer to Political Instability Abroad. What would the change in the exchange rate make happen to U.S. net exports and U.S. aggregate demand?

Accepted Answer

A)  Net exports would rise which by itself would increase U.S. aggregate demand. 
B)  Net exports would rise which by itself would decrease U.S. aggregate demand. 
C)  Net exports would fall which by itself would increase U.S. aggregate demand. 
D)  Net exports would fall which by itself would decrease U.S. aggregate demand. 
A)  Net exports would rise which by itself would increase U.S. aggregate demand. 
B)  Net exports would rise which by itself would decrease U.S. aggregate demand. 
C)  Net exports would fall which by itself would increase U.S. aggregate demand. 
D)  Net exports would fall which by itself would decrease U.S. aggregate demand.

Question 10

Name two macroeconomic variables that decline when an economy goes into recession, and name one macroeconomic variable that rises.

Accepted Answer

Real GDP and investm

Question 11

As recessions begin, income

Accepted Answer

A)  and unemployment both rise. 
B)  rises and unemployment falls. 
C)  falls and unemployment rises. 
D)  and unemployment both fall. 
A)  and unemployment both rise. 
B)  rises and unemployment falls. 
C)  falls and unemployment rises. 
D)  and unemployment both fall.

Question 12

A decrease in what variable will raise the quantity of goods and services supplied, and shift only the short run aggregate supply curve to the right?

Accepted Answer

The expect

Question 13

Since the end of World War II, the U.S. has almost always had rising prices and an upward trend in real GDP. This can be explained

Accepted Answer

A)  only by technological progress. 
B)  only by money supply growth. 
C)  by technological progress and money supply growth. 
D)  None of the above is correct. 
A)  only by technological progress. 
B)  only by money supply growth. 
C)  by technological progress and money supply growth. 
D)  None of the above is correct.

Question 14

Other things the same, an increase in the price level induces people to hold

Accepted Answer

A)  less money, so they lend less, and the interest rate rises. 
B)  less money, so they lend more, and the interest rate falls. 
C)  more money, so they lend more, and the interest rate falls. 
D)  more money, so they lend less, and the interest rate rises. 
A)  less money, so they lend less, and the interest rate rises. 
B)  less money, so they lend more, and the interest rate falls. 
C)  more money, so they lend more, and the interest rate falls. 
D)  more money, so they lend less, and the interest rate rises.

Question 15

Who is credited for the original development of the model of aggregate demand and aggregate supply?

Accepted Answer

The answer of Who is credited for the original development...

Question 16

When interest rates fall

Accepted Answer

A)  firms want to borrow more for new plants and equipment and households want to borrow more for homebuilding. 
B)  firms want to borrow more for new plants and equipment and households want to borrow less for homebuilding. 
C)  firms want to borrow less for new plants and equipment and households want to borrow more for homebuilding. 
D)  firms want to borrow less for new plants and equipment and households want to borrow less for homebuilding. 
A)  firms want to borrow more for new plants and equipment and households want to borrow more for homebuilding. 
B)  firms want to borrow more for new plants and equipment and households want to borrow less for homebuilding. 
C)  firms want to borrow less for new plants and equipment and households want to borrow more for homebuilding. 
D)  firms want to borrow less for new plants and equipment and households want to borrow less for homebuilding.

Question 17

List the three alternative explanations for the upward slope of the short run aggregate supply curve.

Accepted Answer

Sticky wages, sticky

Question 18

In which case can we be sure real GDP rises in the short run?

Accepted Answer

A)  government purchases increase and taxes rise. 
B)  government purchases increase and taxes fall. 
C)  government purchases decrease and taxes rise. 
D)  government purchases decrease and taxes fall. 
A)  government purchases increase and taxes rise. 
B)  government purchases increase and taxes fall. 
C)  government purchases decrease and taxes rise. 
D)  government purchases decrease and taxes fall.

Question 19

The aggregate demand and aggregate supply graph has

Accepted Answer

A)  quantity of output on the horizontal axis. Output can be measured by the GDP deflator. 
B)  quantity of output on the horizontal axis. Output can be measured by real GDP. 
C)  quantity of output on the vertical axis. Output can be measured by the GDP deflator. 
D)  quantity of output on the vertical axis. Output can be measured by real GDP. 
A)  quantity of output on the horizontal axis. Output can be measured by the GDP deflator. 
B)  quantity of output on the horizontal axis. Output can be measured by real GDP. 
C)  quantity of output on the vertical axis. Output can be measured by the GDP deflator. 
D)  quantity of output on the vertical axis. Output can be measured by real GDP.

Question 20

Other things the same, if the price level falls, people

Accepted Answer

A)  increase foreign bond purchases, so the dollar appreciates. 
B)  increase foreign bond purchases, so the dollar depreciates. 
C)  increase domestic bond purchases, so the dollar appreciates. 
D)  increase domestic bond purchases, so the dollar depreciates. 
A)  increase foreign bond purchases, so the dollar appreciates. 
B)  increase foreign bond purchases, so the dollar depreciates. 
C)  increase domestic bond purchases, so the dollar appreciates. 
D)  increase domestic bond purchases, so the dollar depreciates.

Exam 33: Aggregate Demand and Aggregate Supply

Since the end of World War II, the U.S. has almost always had rising prices and an upward trend in real GDP. To explain this

Figure 33-7. -Refer to Figure 33-7. Suppose the economy starts at Y. If aggregate demand increases from AD2 to AD3, then the economy moves to

All explanations for the upward slope of the short-run aggregate supply curve suppose that the quantity of output supplied increases when the actual price level exceeds the expected price level.

Other things the same, which of the following is correct?

An increase in household saving causes consumption to

The sticky-price theory of the short-run aggregate supply curve says that when the price level is higher than expected, some firms will have

An economic expansion caused by a shift in aggregate demand remedies itself over time as the expected price level

Other things the same, the aggregate quantity of output supplied will increase if the price level

Refer to Political Instability Abroad. What would the change in the exchange rate make happen to U.S. net exports and U.S. aggregate demand?

Name two macroeconomic variables that decline when an economy goes into recession, and name one macroeconomic variable that rises.

As recessions begin, income

A decrease in what variable will raise the quantity of goods and services supplied, and shift only the short run aggregate supply curve to the right?

Since the end of World War II, the U.S. has almost always had rising prices and an upward trend in real GDP. This can be explained

Other things the same, an increase in the price level induces people to hold

Who is credited for the original development of the model of aggregate demand and aggregate supply?

When interest rates fall

List the three alternative explanations for the upward slope of the short run aggregate supply curve.

In which case can we be sure real GDP rises in the short run?

The aggregate demand and aggregate supply graph has

Other things the same, if the price level falls, people

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Elasticity and Its Application

Supply, Demand, and Government Policies

Consumers, Producers, and the Efficiency of Markets

Application: the Costs of Taxation

Application: International Trade

Externalities

Public Goods and Common Resources

The Design of the Tax System

The Costs of Production

Firms in Competitive Markets

Monopoly

Monopolistic Competition

Oligopoly

The Markets for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers of Microeconomics

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

The Basic Tools of Finance

Unemployment

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Trade-Off Between Inflation and Unemployment

Six Debates Over Macroeconomic Policy

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